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You are under contract with your current employer for one year at a time. You have been offered a renewal contract that will commence three months from now; however, by the terms of the offer, you must accept it within the next ten days or it will be revoked. You are virtually certain that this will be the last year of work available for this employer, because it is experiencing financial difficulties. You have a great potential position pending with another employer. Although the organization’s authorized representative has indicated that you are the top candidate, no formal offer is likely to materialize for a least thirty days.
1. What options does each of the parties have?
2. How should those options affect each party’s negotiation strategy?
3. Play the role of each party in assessing the other’s likely behavior or strategy for the negotiation.
Expert Answer
1. What options does each of the parties have?
Ans. The candidate can accept the current contract with a rider stating an exit clause. So he can sign the contract and state that if there is a better opportunity he will take that up but serve a notice of two weeks. This way if the other offer does materialize after thirty days then he can take it up and if it doesn’t then he can continue working for the current organization.
On the other hand, the organization giving the renewal contract needs to assess if they can afford to keep the employee for the entire year. In a scenario where they might not be able to afford the candidate for the entire year they should allow him to leave so that they are not bound to him for the whole year. If he leaves they can get someone else in at a lesser price.
The other prospective employer needs to analyze the importance of the candidate and evaluate if they need him or not. If he is important to the growth plan, then there is no sense in waiting for thirty days to offer him. He should immediately be brought on board.
2. How should those options affect each party’s negotiation strategy?
Ans. While negotiating the employee needs to be very careful as he has to understand that even though he is shortlisted he does not have an offer in hand. There is a time gap of thirty days and things can change drastically in those thirty days so he has to work smartly that both his options remain open.
The current organization needs to be smart and try and tighten the screws as per their needs. If they want him to stay, then they do not give him any leeway in the contract renewal but if they want him to go then they just allow him to have the notice period.
The prospective organization needs to understand that the candidate is already looking at leaving his current organization so instead of waiting for thirty days to hire him they should make him an offer which suits both of them and close the position immediately.
3. Play the role of each party in assessing the other’s likely behavior or strategy for the negotiation.
Ans. The prospective candidate will state to his current company that he has been shortlisted and wants to move as he sees no future in the current organization which would make the employers alert if they want the employee to stay. Similarly, he can tell the prospective company that his current company already want him to renew the contract so if they want to wait for thirty days to offer then he will go ahead and sign the renewal contract. This way the prospective company will have to either speed up the process or issue him some kind of an assurance that the position is his if they really want to employ him.
The current organization needs to assess their requirements and gauge the employees’ desperation. If they want him to work for them then they state that he signs the contract as it is with no changes and if they want him to leave, then they just keep an opening in the contract which does not bind him to fulfill the one whole year.
The prospective company has to look at their requirement too. If the employee is important to their scheme of things they should not delay the offer. On the other hand, if he is dispensable then they just stick to their policies and also keep on looking for other candidates if there are chances of the shortlisted candidate being unavailable at the time of actually issuing an offer.
